Nvidia’s Record Sales Leave Markets Wanting More
Nvidia has once again delivered headline-grabbing results, but the market reaction shows just how high the bar has been set. After reporting second-quarter revenue of $46.74 billion—a massive 56 percent increase compared to last year—investors might have expected celebrations. Instead, Nvidia’s stock fell by more than 3 percent in after-hours trading. The reason is simple: expectations were sky-high, and even strong results were not enough to satisfy investors who were hoping for something even bigger.
Most of the growth came from Nvidia’s data center business, which accounted for $41.1 billion of revenue, up 56 percent year over year. That division has become the backbone of Nvidia’s success, as its graphics processing units—or GPUs—are the engines driving artificial intelligence development across industries. Looking ahead, Nvidia is forecasting $54 billion in revenue for the third quarter, a number that already beats Wall Street expectations by nearly $2 billion. Interestingly, this forecast does not include shipments of its H20 chips to China, leaving the possibility that future results could surprise to the upside if sales to that market resume.
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Despite that, investors have been cautious. Some Chinese firms paused orders earlier in the year due to concerns about backdoor tracking, while U.S. restrictions added another layer of uncertainty. Recently, the U.S. government lifted a ban on Nvidia’s H20 chip sales to China, but only after an agreement that requires Nvidia to pay Washington 15 percent of revenues from those sales. Meanwhile, Beijing has reportedly urged local firms to reduce their reliance on Nvidia, creating another obstacle. The situation remains complicated, though analysts say that even partial recovery in Chinese demand could add significant upside.
Nvidia has also announced plans for a massive $60 billion stock buyback, a move aimed at rewarding shareholders and signaling confidence in its long-term growth. That mirrors what Apple did with its own enormous buyback program, though Apple’s came during a period of declining sales. In Nvidia’s case, revenues are still accelerating—growing 20 percent quarter over quarter, which puts the company on track for an annualized revenue run rate of around $220 billion starting next quarter.
The bigger picture is that Nvidia has become the bellwether for the AI boom. Tech giants like Microsoft, Amazon, and Meta continue to pour billions into AI infrastructure, fueling explosive demand for Nvidia’s chips. The company’s new Blackwell Ultra platform is being produced at full speed, with CEO Jensen Huang calling demand “extraordinary” and describing the AI race as being in full swing. Still, the slight dip in stock price highlights how investors are wary that AI growth could eventually slow or that the hype might be overextended.
For now, Nvidia stands as the most valuable company in the world, with a market cap above $4.4 trillion. Its stock has risen more than eleven-fold since early 2023 and is already up over 30 percent this year alone. Whether this momentum continues will depend not only on AI’s staying power but also on how Nvidia navigates its tricky relationship with China. One thing is clear: even when Nvidia posts record-breaking numbers, markets are demanding proof that the story has much further to go.
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